Homework is the key to savers beating inflation

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Savers have been told they will have to do their homework to find a competitive savings account after inflation increased in November.

According to the Office for National Statistics, Consumer Prices Index inflation rose to 3.3% last month, up from 3.2% in October, driven by a record rise in the prices of food, clothing and furniture.

Retail Prices Index inflation, which also takes into account the cost of housing including mortgage interest payments, increased to 4.7%, up from 4.5%.

Following the announcement, Moneyfacts.co.uk said that in order to maintain the purchasing power of their savings, a basic rate tax payer needs to find a savings account paying 4.13% pa, while a higher rate tax payer at 40% needs to find an account paying 5.5% pa.

While basic rate tax payers have a choice of 57 savings accounts, allowing for tax, that negate the impact of inflation, only 44 accounts are available to 40% band tax payers.

"Inflation continues to antagonise prudent savers who are already struggling to achieve a competitive return on their money," said Victoria Mayo, spokesperson for Moneyfacts.co.uk.

"Those who rely on their savings to supplement their income have been hardest hit, many of whom are pensioners.

"Generally, cash ISAs and longer term fixed rate bonds tend to offer the best rates for savers trying to beat inflation; however, savers who think the base rate will go up may be unprepared to commit their funds for the long term.

"Savings rates in the last six months have been slowly rising, with easy access rates at the highest level since June 2010, but the increase has been nowhere near enough to combat the effects of inflation.

"Bearing in mind the number of inflation beating accounts available, savers will really have to do their homework to find a competitive rate."

Good news from RCI Bank UK – its latest research shows that many of us are saving more than we were a year ago, but the question is, will you be dipping into that buffer to cover the cost of Christmas?

Easy-access savings accounts are as simple as they sound – they allow you to access your money whenever you need it, without having to give advance notice, and they also allow you to pay into them at any time. Here are six of the best.